BAN HUA UY FLORES, BAN HA UY CHUA, AND SOON KEE COMMERCIAL, INC., PETITIONERS, VS. JOHNNY K. H. UY, RESPONDENT.

Flores versus Uy

The Case

This is a consolidated appeal by certiorari from a decision of the Court of Appeals, arising from an interpleader action originally filed to determine who rightfully owns a sum of money invested in a shipping venture. On one side are Ban Hua Uy Flores, Ban Ha Uy Chua, and Soon Kee Commercial, Inc.; on the other is Johnny K. H. Uy. The family corporation and two of its stockholders claim that the investment belonged to the Uy family in proportion to their shareholdings, while Johnny Uy claims the entire amount as his own personal investment. The case matters for two reasons: it illustrates the firm rule that factual findings of the Court of Appeals are conclusive on the Supreme Court in a petition for review on certiorari, and it shows when actual and moral damages may be assessed against a litigant who persists in a false claim.

Procedural History

Hongfil Shipping Corporation and Edward Tan Chona filed a complaint for interpleader before the Regional Trial Court of Cebu City, impleading Soon Kee Commercial, Inc., Johnny Uy, Ban Hua Flores, and Ban Ha Chua, and depositing the disputed peso equivalent with the Rizal Commercial Banking Corporation branch in Cebu City. The trial court rendered judgment in favor of Johnny Uy, ordering that the total deposit be remitted to him, with attorney's fees billed against the deposit. The other defendants appealed to the Court of Appeals. The Court of Appeals reversed the trial court and rendered a new judgment ordering that twenty six percent of the deposit go to Johnny and Magdalena Uy and seventy four percent to the defendants-appellants, with attorney's fees of 25,000 pesos payable to the plaintiffs. Johnny Uy moved for reconsideration, which the Court of Appeals denied. Both sides then came to the Supreme Court by petition for review on certiorari, and the two petitions were consolidated and decided jointly.

Facts

The Uy family owned Soon Kee Commercial Corporation. Johnny Uy and his wife Magdalena were stockholders, as were Ban Ha Chua, Ban Hua Flores, and several other family members. Sometime in 1986 and 1987, disputes racked the family, and Johnny and Magdalena broke away, later transferring their investments in Soon Kee to the other stockholders.

The controversy traces back to an investment of one hundred thousand US dollars in Hongfil Shipping Corporation. Edward Tan Chona received the amount in two installments: seventy thousand US dollars from Johnny Uy and thirty thousand US dollars from Ban Ha Chua. When Hongfil ceased operations and sold its vessel, Tan Chona offered to return the investment but could not do so because the Uy family members made conflicting claims. Being on good terms with all of them, he deposited the peso equivalent with the bank and filed an interpleader action.

Johnny Uy testified that he alone dealt with Tan Chona and invested the full amount as his personal venture, supported by a receipt for the seventy thousand dollar installment. Ban Hua Flores testified for the other side that the investment was the personal investment of the Uy family stockholders in proportion to their shareholdings in Soon Kee, that the money was advanced by the corporation but deducted from bonuses and benefits, and that the investment was placed in Johnny's name under an express condition that he hold it in trust for the family. The trial court concluded that the documentary evidence preponderated in favor of Johnny Uy. The Court of Appeals disagreed and held that he was entitled to only twenty six percent, corresponding to his and his wife's share.

Issues

• Whether or not respondent Johnny K. H. Uy was the sole owner of the one hundred thousand US dollar investment of the Uy family in Hongfil Shipping Corporation.
• Whether or not damages may be assessed against respondent Johnny K. H. Uy and awarded in favor of petitioners.

Applicable Provisions

The decision does not quote a specific codal article in full, but it applies the settled rule on the conclusiveness of the Court of Appeals' factual findings in a petition for review on certiorari, and it invokes the Civil Code rules on actual and moral damages. On actual damages, the Court states the governing principle:

Actual or compensatory damages may be awarded for wrongful acts or omissions.

This bears on the second issue, because the Court found that Johnny Uy's false claim forced the petitioners into a protracted and costly trial.

On the proof required, the Court adds:

However, these must be duly proved and established with reasonable degree of certainty.

This is why the Court awarded only the amount shown by undisputed testimony, rather than the full sum claimed.

On moral damages, the Court quotes the standard:

Moral damages are not punitive in nature but are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused to a person.

This supports the award of moral damages arising from Johnny Uy's gross and evident bad faith.

Ruling

On the first issue, the Court held that the question of who owned the investment is a question of fact. In an appeal by certiorari, the Court may not review the findings of fact of the Court of Appeals. When supported by substantial evidence, those findings are conclusive and binding on the parties and are not reviewable, unless the case falls under any of the recognized exceptions. The petitioners did not show that the case fell within any exception. The Supreme Court is not a trier of facts, and it is not its function to review, examine, and evaluate or weigh the probative value of the evidence presented. Questions of fact cannot be raised in an appeal by certiorari before the Supreme Court. The Court therefore left undisturbed the finding that Johnny Uy was entitled to only twenty six percent of the investment.

On the second issue, the Court held that actual damages may be assessed against Johnny Uy. The petitioners need not have spent a great deal of money had he not made a false claim on the family investment, and the protracted trial necessitated the expenditures incurred. The Court found that Johnny Uy acted in gross and evident bad faith in claiming one hundred percent of the investment, despite having made a written admission that the investment was for the Uy family stockholders of Soon Kee. Actual damages are primarily intended to make good or replace the loss caused by a wrong, but they must be duly proved with a reasonable degree of certainty. Based on the undisputed testimony of Ban Hua Flores, the Court awarded 215,506 pesos as actual damages, exclusive of attorney's fees. The Court also awarded moral damages, which are designed to compensate and alleviate the suffering unjustly caused, though they are not intended to enrich a plaintiff at the defendant's expense. Finally, the Court awarded reasonable attorney's fees to the prevailing parties who had to endure a long drawn out litigation to establish their right.

Doctrine

First, in a petition for review on certiorari, the factual findings of the Court of Appeals, when supported by substantial evidence, are conclusive and binding on the parties and are not reviewable by the Supreme Court, save only for the recognized exceptions. The Supreme Court is not a trier of facts, and questions of fact are not proper for its consideration.

Second, actual or compensatory damages may be awarded for wrongful acts or omissions, but they must be duly proved and established with a reasonable degree of certainty. Moral damages, though incapable of pecuniary computation, must be proportional to the suffering inflicted and must be the proximate result of the wrongful act or omission satisfactorily established by the aggrieved party. They are not punitive and are not intended to enrich the plaintiff at the defendant's expense. A litigant who persists in a false claim in gross and evident bad faith may be held liable for actual and moral damages, as well as attorney's fees.

Disposition

The Court modified the decision of the Court of Appeals: it ordered the remittance of twenty six percent of the deposit to Johnny and Magdalena Uy and seventy four percent to Ban Hua Uy Flores, Ban Ha Uy Chua, and Soon Kee Commercial, Inc., and ordered Johnny Uy to pay them 215,506 pesos in actual damages, 50,000 pesos in moral damages, and 25,000 pesos as attorney's fees, with costs against him.

Remember This

The single line worth memorizing is that the Supreme Court is not a trier of facts, so the substantial-evidence findings of the Court of Appeals bind it in a petition for review on certiorari. Examiners like to use this case on the conclusiveness of factual findings, and on the requisites for awarding actual and moral damages against a party who litigates in gross and evident bad faith.